Corinthian Colleges Reports Third Quarter 2013 Results

Corinthian Colleges Reports Third Quarter 2013 Results
SANTA ANA, Calif., April 30, 2013 (GLOBE NEWSWIRE) -- Corinthian Colleges,
Inc. (Nasdaq:COCO) reported financial results today for the third quarter
ended March 31, 2013. Results for the quarter were within the company's
previous guidance ranges for revenue, earnings per share, and new student
enrollment.
"During the third quarter we continued to focus on student outcomes and
initiatives to increase our student population, improve operational
efficiency, and diversify revenue," said Jack Massimino, Corinthian's chairman
and chief executive officer. "Excluding the impact of losing
Ability-to-Benefit (ATB) students, our new enrollments were up slightly in the
quarter and our student population has been stabilizing relative to our peers
over the last few quarters."
"Total new student enrollment was down 5.7%, primarily due to the loss of ATB
students in the Everest ground schools," Massimino said. "In addition, new
Online Learning student enrollments declined slightly quarter over quarter, as
we continue to work through staffing, technology and workflow process issues
in Online admissions and student finance."
"We are pursuing a number of initiatives to achieve more consistent growth,"
Massimino said. "We implemented 42 new programs at 20 campuses during the
quarter, and our GED program enrollment continues to grow. We believe the GED
program will benefit the communities we serve and has the potential to help
increase our campus enrollments over time. In addition, in recent months there
have been a substantial number of competitor school closures in our service
areas. Given macroeconomic and other factors, we expect to see more industry
consolidation in the months ahead. We will continue to work with regulators
and school companies to accept and serve transfer students related to such
closures."
Comparing the third quarter of fiscal 2013 with the same quarter of the prior
year (Note: results for continuing operations only):
*Net revenue was $400.2 million versus $407.9 million, a decrease of 1.9%.
*Total student population at March 31, 2013 was 87,776 versus 93,620 at
March 31, 2012, a decrease of 6.2%.
*New student enrollments totaled 26,738 versus 28,355, a decrease of 5.7%.
*Non-ATB new student enrollments totaled 26,374 versus 26,042, an increase
of 1.3%.
*Operating income was $12.6 million, compared with operating income of
$27.5 million, which excludes $1.3 million and $3.2 million in impairment
and severance charges in Q3 13and Q3 12, respectively.
*Income from continuing operations (after tax) was $3.1 million, compared
with $13.6 million, excluding impairment and severance charges in both
periods.
*Diluted earnings per share from continuing operations were $0.04, versus
diluted earnings per share of $0.16, excluding impairment and severance
charges in both periods.
Financial Review
Educational services expenses were 60.9% of revenue in Q3 13 versus 59.5% in
Q3 12.The increase was primarily due to an increase in bad debt. Bad debt
increased to 3.4% of revenue in Q3 13 versus 2.5% of revenue in Q3 12, due to
systems conversion issues.
Marketing and admissions expenses were 25.7% of revenue in Q3 13 versus 24.2%
in Q3 12.The increase is primarily the result of higher advertising and lead
generation expenses per new enrollment.
General and administrative expenses were 10.2% of revenue in Q3 13 versus 9.6%
in Q3 12.The increase is primarily due to an increase in professional
services expenses.
The operating margin was 3.2% in Q3 13 versus 6.8% in Q3 12, excluding
impairment and severance charges in both time periods.
Cash and cash equivalents totaled $43.9 million at March31, 2013, compared
with $72.5 million at June30, 2012. The decrease in cash is primarily due to
the net repayment of borrowings under our credit facility, partially offset by
the timing of cash receipts and payments.
Debt and capital leases (including current portion) totaled $30.7 million at
March31, 2013, compared with $149.0 million at June30, 2012.The decrease is
due to the net repayment of borrowings under our credit facility.
Cash flow from operations was $128.8 million in the first nine months of FY
13, versus $195.7 million in the same period of the prior year. The decrease
is primarily due to the timing of cash receipts and payments.
Capital expenditures were $28.6 million for the first nine months of fiscal
2013, versus $31.0 million in the same period last year. The decrease is
primarily the result of opening fewer new campuses.
Guidance
The following guidance is for continuing operations and excludes any one-time
charges.
Time Period Revenue Diluted EPS Total New Non-ATBNew
Student Growth Student Growth
Q4 13 $378 - $388 million $0.03 - $0.05 (3-5%) 7-9%
Conference Call Today
We will host a conference call today at 12:00 p.m. Eastern Time (9:00 a.m.
PT), to discuss third quarter results.The call will be open to all interested
investors through a live audio web cast at www.cci.edu (Investors/Events &
Presentations.) The call will be archived on www.cci.edu after the call.A
telephonic playback of the conference call will also be available through
Monday, May 6th.The playback can be reached by dialing (855) 859-2056 and
using passcode 24281088.
About Corinthian
Corinthian is one of the largest post-secondary education companies in North
America. Our mission is to change students' lives. We offer diploma and degree
programs that prepare students for careers in demand or for advancement in
their chosen fields. Our program areas include health care, business, criminal
justice, transportation technology and maintenance, construction trades and
information technology. We have 113 Everest, Heald and WyoTech campuses, and
also offer degrees online. For more information, go to http://www.cci.edu.
Certain statements in this press release may be deemed to be forward-looking
statements under the Private Securities Litigation Reform Act of 1995.The
company intends that all such statements be subject to the "safe-harbor"
provisions of that Act.Such statements include, but are not limited to, those
regarding our initiatives to focus on student outcomes, increase our student
population, improve operational efficiency, diversify revenue and achieve more
consistent growth; our belief that launching new diploma programs in ground
schools and offering free GED preparation programs at some Everest campuses
will help increase enrollment over time; our expectation that competitor
campus closures will continue and that our enrollment will increase as a
result of such closures; and the statements under the heading "Guidance"
above.Many factors may cause the company's actual results to differ
materially from those discussed in any such forward-looking statements or
elsewhere, including: potential negative effects from the loss of ATB
students; the uncertain outcome of the Department of Education's ("ED's")
determination related to our financial responsibility composite score; the
company's effectiveness in its regulatory and accreditation compliance
efforts; the outcome of ongoing reviews and inquiries by accrediting, state
and federal agencies; the outcome of pending litigation against the company;
risks associated with variability in the expense and effectiveness of the
company's advertising and promotional efforts; potential increased
competition; changes in general macroeconomic and market conditions (including
credit and labor market conditions, the unemployment rate, and the rates of
change of each such item); and the other risks and uncertainties described in
the company's filings with the U.S. Securities and Exchange Commission. The
historical results achieved by the company are not necessarily indicative of
its future prospects.The company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Corinthian Colleges,Inc.
(In thousands, except per share data)
Consolidated Statements
of Operations (unaudited)
Forthethreemonthsended Fortheninemonthsended
March31, March31,
2013 2012 2013 2012
Net revenues $400,167 $407,857 $1,216,277 $1,191,289
Operating expenses
Educational services 243,736 242,483 743,811 722,861
General and 41,012 39,089 126,245 131,015
administrative
Marketing and admissions 102,794 98,742 303,996 292,981
Impairment, facility
closing and severance 1,279 3,221 2,039 15,164
charges
Total operating expenses 388,821 383,535 1,176,091 1,162,021
Income from operations 11,346 24,322 40,186 29,268
Interest income 158 665 523 1,569
Interest expense (1,336) (2,394) (3,841) (7,774)
Other expense, net (6,352) (3,425) (16,761) (6,576)
Income from continuing
operations before 3,816 19,168 20,107 16,487
provision for income
taxes
Provision for income 1,439 7,490 7,760 6,181
taxes
Income from continuing 2,377 11,678 12,347 10,306
operations
Loss from discontinued (3,397) (7,589) (11,856) (14,059)
operations, net of tax
Net income (loss) $(1,020) $4,089 $491 $(3,753)
Income (loss) per
share—basic
Income from continuing $0.03 $0.14 $0.14 $0.12
operations
Loss from discontinued $(0.04) $(0.09) $(0.13) $(0.16)
operations
Income (loss) per
share—diluted
Income from continuing $0.03 $0.14 $0.14 $0.12
operations
Loss from discontinued $(0.04) $(0.09) $(0.13) $(0.16)
operations
Weighted average number
of common shares
outstanding
Basic 86,065 85,080 85,780 84,918
Diluted 87,097 86,124 86,616 85,446
Selected Consolidated Balance Sheet Data (Unaudited)
March31, June30,
2013 2012
Cash and cash equivalents $43,899 $72,525
Receivables, net (including long term notes receivable) $176,184 $197,763
Current assets $298,939 $356,345
Total assets $996,173 $1,064,513
Current liabilities $325,359 $284,154
Total debt and capital leases $30,673 $148,974
Total liabilities $424,946 $499,598
Total stockholders' equity $571,227 $564,915
CONTACT: Investors:
Anna Marie Dunlap
SVP Investor Relations
714-424-2678
Media:
Kent Jenkins
VP Public Affairs Communications
202-682-9494
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